Options trading has only recently become a viable investment vehicle for people. Five to seven years ago it was on the fringe. Ten years ago it was considered an alternative investment for wealthy individuals. Now trading options daily in the markets has become the ultimate wealth creation tool.
Quick Penny Stock Myth Busted
Myths in the world of finance and investing are hard to bust. Some myths are easy to spot – like the penny stock riches myth. It’s completely a rigged game in favor of the penny stock services. Here’s how they make money and you don’t…
They gather up a huge list of subscribers via their website. Then then buy up a cheap penny stock in their own accounts. Send out an email to their subscribers telling them to buy the penny stock. Meanwhile they are making huge profits, only to dump the stock at it’s height when most investors actually buy in. Leaving you with a worthless penny stock once again. See the light yet?
Myth #1: It’s only for pros with years of experience
How ridiculous. Although it has long been held that trading options should be left to only the most-experienced traders. But with the vast trading systems and internet connections these days options trading can easily be done by beginner traders.
On this blog alone we have done over 1,500 posts and articles you can read through that will give you a solid and strong understanding of options trading. Moreover, the thousands of online tools and software that is available really levels the playing field for today’s at home option trader. You can use the exact same tools and charts that professional traders are using on Wall Street right now.
Options trading just for the pros? Myth busted!
Myth #2: You have to have thousands of dollars
Again, this is a big misconception. You can and SHOULD start trading option with a small amount of money first. I see traders all the time start with $20-50K and lose most of it in the first month. Start small and master the strategies first – then increase your account size once you have a solid understanding of how to trade like a professional.
The focus on investor strategy is the real difference in today’s options education market. Teaching and coaching traders on strategies first helps them understand where and when to make trades in any market condition. Then we focus on increasing and exponentially growing their account.
Rarely if ever have I seen a guy with a lot of money start trading options and never see a major account draw. But I have seen a lot of small traders slowly and consistently grow their account after they mastered some simple strategies.
Spending thousands to start trading options? Myth busted!
Myth #3: Options trading is a fad and won’t last
When the internet first came out some people called it a FAD. That it didn’t really help solve problems and/or wasn’t worth the time and effort to understand. How stupid those people probably feel now right? Clearly the internet was a “game changer.”
Currently only 2% or 3% of all brokerage accounts are approved for trading options. So, 97%-98% of people who have brokerage accounts in this country are not even approved for options trading. Just like the internet, options trading is still fairly young and growing by leaps and bounds.
Taking the time now to understand and learn how options trading can help protect and grow you portfolio will be invaluable in the coming years. Rarely if ever have you had such a great opportunity to get in on the ground floor and grow with an industry. I consider myself lucky to have been trading options as long as I have already and have seen some vast changes for the better.
A fad you can ignore? Myth busted!
As professionals and beginners who read this blog, what are some of the myths you have busted about options trading and options strategies along the way?
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I've been told by tons of people that you've got to either have a lot of money or a really killer system to trade options and win. Some new indicator or signal that will transform your portfolio.
Honestly, there is no "magic secret" to trading options. It simply comes down to an understanding of risk management, option pricing and strategy selection.
Instead of learning these lessons the hard way (i.e. losing your shirt in the market), why not take my free 4-part video course as I cover each area in detail. Plus, I'll go over the exact checklist I use for selecting trades each month!